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| >> Regional Overview >> Federal Republic of Yugoslavia Overview | |||||||||||||||||||||
The Federal Republic of Yugoslavia is composed of two constituent republics: the Republic of Serbia and the Republic of Montenegro. The Republic of Serbia includes the autonomous provinces of Vojvodina and Kosovo. The province of Kosovo is currently under the administration of the United Nations Mission in Kosovo. USAID's program in Kosovo is described separately in this document due to this special UN administered status. In response to policy guidance from the Department of State, USAID is presenting an integrated budget justification for the Federal Republic of Yugoslavia and has not segregated activities by the two constituent republics. IntroductionU.S. assistance to the Federal Republic of Yugoslavia (FRY) is based on fundamental U.S. national interests in Europe. The FRY is crucial to the economic development of Southeast and Central Europe and to the political stability of Europe as a whole. As a social, political and geographic crossroads between Western and Eastern Europe, Turkey, and Greece, the FRY occupies a key geographic juncture in the Balkans. The FRY's current political situation is fragile. There are continuing uncertainties regarding future relations between the FRY and its constituent Republic of Montenegro. Ethnic tension in the FRY and neighboring countries such as Macedonia persist. For these reasons, timely support of the people of the FRY to deepen and broaden their fledgling democratic transition is critical. Similarly, it is essential that all citizens of the FRY quickly obtain sustainable employment and tangible economic benefits from their break with the country's authoritarian past. Otherwise, their ability to resist pressures either from supporters of the former regime to discard a transparent and inclusive democratic system or from extremists to inflame ethnic, religious and/or cultural differences will be severely circumscribed. Development ChallengeThe peaceful uprising of the people of Serbia on October 5, 2000 reaffirmed their September federal and municipal vote rejecting the Slobodan Milosevic regime's authoritarianism. Significant segments of the population of Montenegro boycotted the September elections. The people of Montenegro are divided in their commitment to a continued Federal Republic structure. The April 22, 2001 parliamentary elections provided a narrow victory for pro-independence parties and will most likely lead to a Montenegrin referendum on independence. The peoples' vote for the Democratic Opposition of Serbia (DOS) coalition in the Republic of Serbia December 23, 2000 elections pushed Milosevic's party further into the background. USAID's SEED Act Assistance for Eastern Europe and Baltic States (AEEB) and Office of Transition Initiatives (OTI) funded programs during FY 2000 directly supported resistance against Milosevic's machinations to stay in power, as well as the process of democratic change that led to the electoral defeat of his regime. USAID's partners helped to improve local capacity to defend human, civil and political rights, to advance the cause of non-violent democratic change, and to lay the foundation essential for the nation's transition to democracy and a market economy. The citizens of the FRY were provided the tools to commence representational democracy through training in party organization and the preparation of campaign themes and messages. Opinion polls, voter education and get-out-the-vote programs were carried out. Support was provided for parallel vote tabulation, and for objective, independent media reporting on issues and events. OTI provided grants to several dozen local media, nongovernmental organizations (NGOs), and citizen groups, using its Support Which Implements Fast Transactions contractor, RONCO. USAID also provided humanitarian assistance to help alleviate the plight of refugees, internally displaced people and vulnerable groups, such as pensioners, persons with disabilities, and children in institutions. During FY 2000, P.L. 480 commodities were provided through the World Food Program (WFP). Because of concerns that the Yugoslav Red Cross and some local Red Cross chapters were not following international standards, an alternative local distribution network (AltNet) was developed. AEEB funds were transferred to OTI for a pilot food distribution program in eight Serbia municipalities. The alternative distribution program was continued through a grant to International Relief and Development (IRD). The FRY faces a multitude of challenges as it establishes an inclusive and transparent democracy. The most urgent are: restoring a sense of security to citizens from every ethnic, religious and social background; establishing the rule of law; bringing corrupt officials and war criminals to justice; and establishing peace and reconciliation among the leaders and citizens of Serbia, Montenegro, Kosovo, and Vojvodina. The disastrous effects of a decade of mismanagement and manipulation of economic and social institutions must be overcome while fostering the return or assimilation of some 700,000 refugees and internally displaced persons. Pro-democracy forces must be strengthened to withstand the pressure of those who wish to return to prior practices or to use bullets rather than ballots to resolve real and/or perceived injustices. The reforms needed for sustainable economic development and a representational democracy must be supported. This first stage of the FRY's movement to an inclusive and transparent democracy is the principal development challenge facing USAID. The loosely-knit 18 party DOS coalition remains fragile as friends of the old regime position for a return to autocratic ways and other extremists exploit ethnic, social and religious tensions among various factions. USAID's strategy over the next three-to-five years is based on three broad areas: democracy and governance; community development activities aimed at fostering democracy in municipal governance; and broad economic policy reform and private sector assistance at the federal, republic, and local levels. Assistance that strengthens civic participation in community and economic decision-making and increases transparent two-way relationships between citizens and government will continue at significantly increased levels. Assistance in rule of law will be increased as assistance in political process and NGO and free labor development is continued. Support will continue for policy reforms that lay the foundation for sustainable, broad-based development, as well as direct interventions to strengthen the private sector and stimulate economic growth. In addition, significant amounts of P.L. 480 assistance will be continued through the WFP to assist in alleviating the plight of refugees, internally displaced people and vulnerable groups such as pensioners, persons with disabilities, and children in institutions. The FRY is working with the international financial community to restructure the external debt of the former Socialist Federal Republic of Yugoslavia. That debt is estimated to range from $14 to $15 billion and constitutes as much as 140% of gross domestic product. Other DonorsPrior to the FRY's movement toward a transparent democracy, donor support consisted mainly of humanitarian assistance through the United Nations (UN) system. Since then, virtually the entire international community has undertaken steps to establish programs. The European Union's (EU) European Agency for Reconstruction (EAR) and European governments were the first to respond to new opportunities in the FRY, especially Serbia. It is anticipated that the EU's 180 million Euro emergency program, which includes fuel and schools for democracy programs, will be fully disbursed by the spring or early summer of 2001. EAR's 143 million Euro 2001 program will support energy (spare parts, generation and distribution), agriculture (fertilized, animal feed and technical assistance), private enterprise (small and medium enterprise training and credit), health (pharmaceuticals and monitoring) and policy (advice on legal reform and World Trade Organization accession). Canada and Japan also have provided assistance. FRY has rejoined the International Monetary Fund and discussions with the World Bank reportedly are proceeding well. Membership is anticipated by October 2001. The FRY is seeking a $300 million stand-by agreement from the International Monetary Fund. The European Bank for Reconstruction and Development (EBRD) is preparing its investment plans and recently opened a new Micro Finance Bank. The economic assistance program of the United States should drop from second to about the fourth largest in dollar terms once the programs of European and international finance institutions get underway. FY 2002 ProgramThe Administration proposes to use $145 million in FY 2002 AEEB funds to support programs in the Federal Republic of Yugoslavia (FRY) encompasssing its two constituent republics, the Republic of Montenegro and the Republic of Serbia, but not including the UN administered province of Kosovo. Activities, summarized below, will be carried out under three Strategic Objectives rather than the four used for the Montenegro program and six used for the Serbia program in FY 2001. USAID's Office of Transition Initiatives will use its resources to implement programs to facilitate the transformation to democracy. In addition, P.L. 480 resources will continue to address the humanitarian assistance needs of refugees, internally displaced persons, and vulnerable groups such as pensioners, persons with disabilities, and children in institutions. USAID will work in conjunction with U.S. Treasury advisors to advance the policy and economic framework for sustainable economic growth and the emergence of a viable private sector. Programs in Montenegro will continue as currently planned. USAID will work with the Governments of the FRY, Serbia, and Montenegro to coordinate support with the World Bank, International Monetary Fund and other international financial institutions to identify areas of structural reform where U.S. Government resources can be best utilized. USAID will continue to support the participation of citizens in political and economic decision making during FY 2002. USAID will expand the number of communities with committees that promote inter-ethnic decision-making on local infrastructure and economic projects. Rule of law activities supporting human rights, political reform, fair laws, and judicial reform will be expanded. Assistance will continue to increase the openness and managerial capacity of local government personnel and systems. Political sector development will continue to help ensure open, free and fair elections and to increase transparency, accountability and effective legislative and public administration. Efforts to grow and improve civil society organizations devoted to human rights, peaceful civic action, and a free and democratic labor movement will be funded. Support to improve the sustainability and content of objective, independent media will continue as will the media small grants program. Under cross-cutting initiatives, funding will support program development, evaluations, and audits. Transfers to other USG agencies are included under this rubric. The Department of State will support Public Diplomacy and similar high priority programs, such as police reform and training. The Department of Treasury advisors will complement USAID's program and focus on financial crime investigation, tax implementation, budget and banking reforms. USDA will continue activities in agricultural policy reform and regulatory assistance. Department of Commerce programs aimed at commercial law and trade development will be funded through the AEEB regional budget. Activity Data Sheets
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